The Customer Institute is a website designed to provide answers to the most important questions for every business; namely, how is my customer asset doing? Is it getting better or worse? How can I improve it.
This site will be the repository of customer data gathered from sources worldwide.

Saturday, May 2, 2015

The State of Customer Loyalty in Small Businesses

A joint study of approximately 900 small business owners
presents an interesting insight into what small businesses are doing in the
world of customer loyalty. The surveys were performed through a joint study by BIA/Kelsey
and Manta in 2014. Some of the top level findings from the study are noted
below:

1.61%
of small businesses now generate the majority of their annual revenue from
repeat customers.

2.62%
of small-business owners are now spending the majority of their annual
marketing budget to retain existing customers.

3.The
survey reported that a repeat customer spends 67% more on average than a new
customer.

4.Only
34% of small businesses have a loyalty program.

5.Of
the small businesses that have a loyalty program, only 46% are in digital form,
such as an e-mail list.

6.Only
29% of small businesses use a customer relationship management (CRM) tool to
track customer information.

7.When
asked about the purpose of their customer loyalty program the dominant answer
was “improve customer relationships”. Only 39% of those with a loyalty program
noted this as their primary purpose. The secondary purpose was to “grow revenue”,
which occurred with 36% of the small businesses.

There appears to be a dramatic change over the last
several years for small businesses. Surveys done in 2012 found that small
businesses focused on customer acquisition seven times more than customer loyalty
and retention. In the 2012 Survey only 6% of the small businesses surveyed spent
more than half the annual marketing budget on customer retention.

The bottom line is that small businesses seem to be
migrating to the concept that loyal customers provide a greater source of
revenue from each loyal customer than a newly acquired customer. It is also obvious, that loyal customers lower
the cost of customer acquisition and provide a more sustainable revenue flow. Customer loyalty programs work for small
businesses just as well as they do for large businesses. It's about time that
all the small businesses think about customer loyalty and make the decision to make
it a strategic component of their business.

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